Bridges Weekly Trade News Digest • Volume 9 • Number 6 • 23rd February 2005
Small Economies’ Characteristics, Problems And Solutions Examined
The WTO Committee on Trade and Development Dedicated Session (CTD-DS) meeting on 21 February agreed on a process to move forward the work programme on small economies using an approach suggested by Chair Ambassador Trevor Clarke of Barbados. The ‘Dedicated Session’ of the CTD focuses exclusively on small economies.
Although Members diverged on whether it was necessary to define the characteristics of small economies, they agreed that the CTD-DS would consider the characteristics and problems of small economies and then design solutions in order to make progress on the group’s mandate, outlined in Paragraph 35 of the Doha Declaration (WT/MIN(01)/DEC/1).
At a meeting of the regular session of the Committee on Trade and Development the next day, Members were unable to agree on the approval of ad hoc observers. They also saw presentations on commodities and electronic commerce.
Chair’s new approach gains support
Clarke, in his last meeting as CTD chair, identified a three-step procedure for the CTD-DS at an informal meeting of the group on 25 January; he formally presented it to Members at the meeting on 21 February. The first step entails the consideration of the use of characteristics to identify what can be accepted as small, vulnerable economies. Step two involves the consideration of the trade-related problems that could reasonably be attributed to those characteristics. Step three would involve framing responses to those trade-related problems that these countries could use. Unusually, no countries would be named during this process.
The reluctance to name a particular group of countries stems primarily from some Members’ fears over differentiation amongst developing countries (see BRIDGES Weekly, 10 November 2004). Such differentiation is a very contentious issue in the WTO, to the extent that the Doha mandate on small economies explicitly specified that Members were to "frame responses to the trade-related issues identified for the fuller integration of small, vulnerable economies into the multilateral trading system, and not to create a sub-category of WTO Members." Some countries fear that naming a group of countries, or even specifying too clearly which countries could benefit from the proposed solutions, would amount to differentiation. At the meeting, all Members agreed that negotiations in the CTD-DS would not attempt to create a new sub-category of countries in the WTO.
The sequencing of the first and second steps of Clarke’s suggested approach divided Members. Brazil, Colombia, Ecuador, Egypt, Costa Rica, Mexico, India, Hong Kong, and Peru suggested that the problems facing small economies should be dealt with first, while Cuba, El Salvador, Canada, and the Dominican Republic preferred to first deal with the characteristics of small economies. Guatemala, Jamaica, Argentina, Sri Lanka, St Kitts and Nevis were interested in looking at both issues at the same time. The US, EU, Switzerland and Paraguay said they were flexible one way or the other.
The first group, composed mainly of larger developing economies, said that some characteristics of small economies probably also apply to other developing countries. They argued that the purpose of defining such characteristics is unclear. Once those characteristics are identified, they asked, how many must apply to one country for it to be called a small and vulnerable economy? They argued that the logical sequence would be to identify the problem, see if it is a consequence of the smallness and vulnerability of the economy, and then try to find a solution. Trade sources suggested that in informal negotiations, they told countries with small economies that it might not be in their interests to open up the issue of characteristics because the debate would be time-consuming, would reopen the contentious differentiation issue, might lead to problems at the Hong Kong Ministerial and because the Doha mandate does not specifically mention characteristics.
The second group, on the other hand, said it makes sense to start with the underlying causes of the problems facing small and vulnerable economies. To this end, a paper setting out key characteristics and problems of small economies was submitted to the CTD-DS by Antigua and Barbuda, Barbados, Bolivia, Dominican Republic, El Salvador, Fiji, Guatemala, Honduras, Mongolia, Nicaragua, and Trinidad and Tobago (WT/COMTD/SE/W/12). Focusing on the characteristics, they argued, would help Members better understand the structural handicaps that prevent small economies from reaping the full benefit of the multilateral trading system. However, they remained willing to clarify the trade-related problems as well as the relation between characteristics and problems.
The meeting concluded with Members deciding to take up steps one and two, i.e., the consideration of characteristics and problems, simultaneously. The session will then move on to design appropriate systemic responses to these problems. They agreed that the group would have to move quickly in order to achieve results by the December WTO ministerial in Hong Kong.
Ad hoc observers in question
The meeting of the regular session of the CTD was held on 22 February and included the consideration of two requests for ad-hoc observer status. The Organisation of Eastern Caribbean States and the League of Arab States had submitted requests that several Arab Members said had to be considered simultaneously. However, participants were unable to agree on allowing the groups observer status and the issue will thus be considered at the next CTD meeting.
The remainder of the meeting included presentations on primary commodities by Malaysia and on electronic commerce by the International Telecommunications Union.
Consideration of the graduation of the Maldives from least developed country (LDC) status was postponed to the next meeting because the delegate from the Maldives was unable to attend. The last item in the short meeting, on the participation of LDCs in the multilateral trading system, will also be dealt with at a subsequent gathering.
The next meeting of the Regular Session of the CTD is scheduled for 11 May. The new CTD chair is Ambassador Gomi Tharaka Senadhira of Sri Lanka.
ICTSD reporting.